Proactive Investors - Markets are bracing for a pivotal week dominated by the Federal Reserve's meeting, earnings reports from tech giants, and crucial economic data, all amidst a backdrop of heightened volatility.
While no immediate changes are expected in the Wednesday announcement, chairman Jay Powell’s comments should once again steer market sentiment.
“After back-to-back months of rising inflationary numbers and a handful of Fed speakers changing their tone on rate cuts prior to their quiet period, it is unlikely to hear any more talk of cuts in the near-term,” writes Jay Woods, chief global strategist at Freedom Capital Markets in his weekly newsletter.
Aside from the Fed decision, earnings season continues to command attention. The question looms whether tech giants Apple (NASDAQ:AAPL) and Amazon (NASDAQ:AMZN) can replicate the successes of their peers like Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL), or if their performances will resemble that of Meta (NASDAQ:META).
Investors will also be paying attention to Pfizer (NYSE:PFE)'s upcoming earnings report amidst a protracted downtrend. Similarly, Amazon and Apple face scrutiny as they prepare to release their quarterly results, with technical analysis suggesting pivotal price levels that could dictate their future trajectories.
While there's been a notable uptick in both earnings per share (EPS) and revenue beats, the market has shown reluctance to reward companies with new highs, even amidst strong performances, according to Woods. This trend raises doubts about the market's ability to surge beyond its current highs in the near term.
Adding to the economic landscape, the eagerly awaited April jobs report is scheduled for release on Friday. Despite its current stability, concerns persist about the possibility of an uptick in unemployment figures.
Market dynamics indicate a recent stabilization following a tumultuous period, with the index rebounding to the 5,000 mark after enduring its worst week of the year. However, volatility remains elevated, primarily driven by earnings outcomes rather than geopolitical factors.
Technically, the market is navigating between its 50 and 100-day moving averages, a common pattern during pullbacks, as investors await a catalyst to propel it upwards.
“The economic headwinds remain as the higher-for-longer narrative appears to be here for the foreseeable future and the 10-year slowly trends back to 5%,” Woods writes.
“Earnings growth remains strong, but at this time not strong enough to keep momentum higher.”
In terms of economic indicators, Thursday brings the release of initial jobless claims, followed by the eagerly anticipated April unemployment rate on Friday. These data points will provide further insights into the labor market's resilience amid ongoing economic uncertainties.
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